Daily Insight
Group Economics Macro & Financial Markets Research
23 March 2016
Who is who on the FOMC dot plot? Maritza Cabezas Senior Economist Tel: +31 20 343 5618
assigned specific members to each dot in the dot plot
maritza.cabezas@nl.abnamro.com Aline Schuiling Senior Economist Tel: +31 20 343 5606 aline.schuiling@nl.abnamro.com
Based on the most recent interventions of FOMC policy makers, we have
We still see a dovish bias, suggesting that downside risks to the outlook will continue to have more weight in policymaking
A majority of members in favour of more hikes are non-voting
We expect the Fed to delay rate hikes this year
Eurozone surveys pick up in March but remain lacklustre
FOMC rate decision: between the “hawks” and the “doves The attitude of Fed policymakers towards the path of monetary policy is used to classify them as “hawks” or “doves”. The “hawks” prefer tighter monetary policy since they usually fear the risks of inflation, while the doves are more keen on continuing monetary accommodation to support the economy, particularly employment. For instance, the Chair of the Fed is often classified as dovish. She has persistently shown a cautious tone. Chair Yellen has favoured keeping rates on hold until there are clear signs that the labour market slack is diminishing. An acceleration of wage growth would likely be a sign of a stronger labour market.
FOMC assessment of appropriate monetary policy %
“dot plot”
2
1.5
●●●●
Lacker, Mester, Lockhart, George (v)
●●●
(v)
Bullard, Kashkari, Kaplan (v)
1
●●●●●●●●●
Yellen, Fischer, Rosengren, Dudley, Tarullo, Brainard, Powell, Williams, Harker (v) (v) (v)
●
(v)
Evans
0.5
0
2016
Source: Federal Reserve, ABN AMRO Group Economics
Insights.abnamro.nl/en
(v)
(v)
(v)
2
Daily Insight – Who is who on the FOMC dot plot? - 23 March 2016
The dot plot shows how members feel about monetary policy Based on the most recent interventions of FOMC policy makers, we have assigned them a specific dot in the dot plot, which was released in the March FOMC meeting. The dot plot shows where each participant predicts the fed funds rate will be at the end of this year and in the following few years. It provides insights into how the committee members feel about monetary policy. Voting FOMC members have a more dovish bias We can draw several conclusions from the dot plot: To begin with, from the 17 members, a majority (10) is classified as doves. Moreover, only 10 of the total number of members are voting members. Of these 10 voting members, 7 are dovish and are expecting 2 rate hikes this year. Finally, 4 of the 7 most hawkish members are non-voting. This all suggests that the FOMC’s composition is dovish, implying that downside risks to the outlook will continue to have more weight in policymaking. Eurozone surveys improve but stay subdued A broad range of business climate indicators for the eurozone was published yesterday. They all improved in March, following sharp drops in January and February. The eurozone composite PMI increased from 53.0 in February to 53.7, Germany’s Ifo business climate rose from 105.7 to 106.7 (its expectations component from 98.8 to 100.0) and, finally, German’s ZEW economic sentiment rose from 1 to 4.3. Despite the recovery in March, all indicators were still well below their levels of the final few months of 2015, suggesting that GDP growth lost some momentum in 2016Q1. Moreover, the details of the PMI report show that the outlook for eurozone exports still is fragile, with the new export orders component of the manufacturing PMI edging lower in March, staging its third consecutive monthly decline.
3
Daily Insight – Further ECB easing - 22 March 2016
Day
Date
Time
Country
Key Economic Indicators and Events
Monday Monday Monday Monday Monday
21/03/2016 21/03/2016 21/03/2016 21/03/2016 21/03/2016
08:45:00 09:15:00 10:30:00 15:00:00 17:40:00
EC US EC US US
ECB's Coeure speaks in Paris Fed's Lacker speaks in Paris ECB's Constancio speaks in London Existing home sales - % mom Fed's Lockhart speaks on US economy
Tuesday Tuesday Tuesday Tuesday Tuesday Tuesday
22/03/2016 22/03/2016 22/03/2016 22/03/2016 22/03/2016 22/03/2016
10:00:00 10:30:00 11:00:00 14:00:00 14:00:00 18:30:00
DE GB DE US HU US
Ifo - business climate - index CPI - % yoy ZEW index (expectation economic growth) FHFA house price index - % mom Base rate -% Fed's Evans speaks in Chicago
Wednesday Wednesday Wednesday
23/03/2016 23/03/2016 23/03/2016
00:00:00
EC US US
ECB's Weidmann speaks in Liechtenstein New homes sold - % mom Fed's Harker speaks in New York
Thursday Thursday Thursday Thursday Thursday Thursday Thursday Thursday
24/03/2016 24/03/2016 24/03/2016 24/03/2016 24/03/2016 24/03/2016 24/03/2016 24/03/2016
10:00:00 10:00:00 10:00:00 10:30:00 13:00:00 13:15:00 13:30:00 14:45:00
EC EC EC GB TR US US US
PMI manufacturing - index PMI services - index Composite PMI output Retail sales - % mom Repo rate - % Fed's Bullard speaks in New York New durable goods orders - % mom Markit - Flash PMI
Friday Friday
25/03/2016 25/03/2016
00:30:00 13:30:00
JP US
CPI - % yoy GDP - % qoq annualised
Period
Latest outcome
Consensus
ABN AMRO
Feb Feb
-7
-2 -2
-1.0 -1.0
Mar Feb Mar Jan Mar 22
106.7 0.3 4.3 0.4 1.20
105.9 0.3 5.2 0.5 1.35
106.1
Feb
-9.2
2.1
3.0
Mar P Mar P Mar P Feb Mar 24
51.2 53.3 53.0 2 7.5
51.4 53.5 53.2 -1 7.5
51.2 53.2 53.0
Feb P Mar P
4.7 51.3
-2.0
Feb 4Q T
0.0 1.0
0.3 1.0
10.0 0.5 1.35
7.5
1.0
Source: Bloomberg, Reuters, ABN AMRO Group Economics (we provide own forecasts only for selected k ey variables and events)
Find out more about Group Economics at: https://insights.abnamro.nl/en/
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